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What role should public firms play in the upstream market?

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  • Yongfu Liang
  • Leonard F. S. Wang
  • Yapo Yang

Abstract

We investigate the upstream public firm's desirable option of production timing in the vertically related upstream market. We find that multiple equilibria may exist, including the Cournot‐type and Stackelberg‐type, with different degrees of privatization in the presence of upstream firms' efficiency gap. These equilibrium outcomes are also influenced by the intensity of downstream market competition. We further show the corresponding optimal degree of privatization in different phases of gradual privatization.

Suggested Citation

  • Yongfu Liang & Leonard F. S. Wang & Yapo Yang, 2023. "What role should public firms play in the upstream market?," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(1), pages 101-117, March.
    • Handle: RePEc:bla:ijethy:v:19:y:2023:i:1:p:101-117
    DOI: 10.1111/ijet.12337
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